• FTC Jumps on Trampoline Marketing
• FTC, Amazon Refund Consumers
• Kinesio Tape Maker Seals $1.7M False Ad Suit
• Weight Loss Drug Gains FDA Warning About False Advertising

FTC Jumps on Trampoline Marketing

By Richard P. Lawson, Partner, Advertising, Marketing and Media

The Federal Trade Commission (FTC) bounced purportedly misleading trampoline marketing claims in a new administrative consent order.

Son “Sonny” Le and his brother Bao “Bobby” Le operated a web of businesses to sell Infinity and Olympus Pro brand trampolines. To market their products, the California-based pair used multiple websites that “prominently” featured logos from allegedly independent review entities such as “Trampoline Safety of America,” the “Bureau of Trampoline Review,” and “Top Trampoline Review,” the FTC said.

The sites claimed to provide objective information, unbiased “expert reviews” of various brands and models, and ratings using factors that included safety and performance. Each site recommended the trampolines sold by the Les and disparaged its competitors. In reality, the websites were all owned and operated by the defendants, the FTC alleged.

The bogus Trampoline Safety of America informed readers that “[w]e highly recommend the Infinity Trampoline. … It is by far one of the safest and best trampolines we’ve reviewed.” The site was touted as “a third-party organization involved in studying the technical aspects of all the major trampoline sites in America,” made up of trampoline gymnastic coaches, structural engineers and other professionals with the goal of educating the public about “the safeties of trampolines.”

To settle the charges of violating Section 5 of the Federal Trade Commission Act, the Les agreed to a proposed consent order that prohibited them from engaging in the wide range of misrepresentations alleged in the complaint. In addition, they must make clear, conspicuous disclosures in close proximity to an endorsement of any unexpected connection between the endorser and the company or anyone associated with it. A clear and conspicuous disclosure is also included wherever the Les review a product that they sell or that competes with one they sell.

To read the complaint and the proposed consent order in In the Matter of Son Le, click here.

Why it matters: The proposed consent order—open for public comment until June 30—provides advertisers with several important takeaways about the importance of disclosing material connections between reviewers and endorsers, and steps to avoid the use of misleading seals, fake testimonials and false reviews.

FTC, Amazon Refund Consumers

By Richard P. Lawson, Partner, Advertising, Marketing and Media

It was a big week for consumer refunds, as the Federal Trade Commission (FTC) mailed almost $2 million to consumers for bogus weight loss products and Amazon launched the refund process as part of its deal with the agency in an action involving in-app purchases by children.

The agency announced that it sent 38,553 checks totaling $1.9 million (with an average payment of $49.66) to consumers who purchased Pure Health or Genesis Today green coffee bean extract supplements. Last year, the FTC sent refunds to 191,748 online purchasers with checks totaling $9,190,842.68, or an average payment of $47.93.

As part of a settlement, the defendants agreed to pay the refunds based on their unsubstantiated weight loss claims for their products, including that users could lose 17 pounds and 16 percent of their body fat in 12 weeks without diet or exercise. The defendants disseminated their false claims via fake websites designed to look like legitimate news sites, the agency alleged, as well as television programs like The Dr. Oz Show and The View.

In the Amazon action, the refunds were based on unauthorized in-app charges incurred by children. More than $70 million in charges incurred between November 2011 and May 2016 may be eligible for refunds, the FTC noted.

The agency reached a deal with Amazon earlier this year where both parties agreed to drop their appeals of a Washington federal court’s grant of summary judgment in the FTC’s favor. The settlement followed similar agreements with other tech companies (see https://www.manatt.com/insights/newsletters/advertising-law/ftc,-apple-reach-$32-5m-deal-over-in-app-purchases#Article5 and https://www.manatt.com/insights/newsletters/advertising-law/complimentary-tcpa-update-webinar-the-year-in-rev#Article1) in similar suits.

To read about the green coffee bean extract supplement refunds, click here.

For details about the Amazon refund process, click here.

Why it matters: The sizable settlements in the in-app purchase actions (up to $70 million in refunds from Amazon, $32.5 million from Apple and $19 million from Google) reiterate the importance of obtaining express consent before placing charges on consumers’ credit or debit cards, while the additional refunds in the green coffee bean cases serve as a reminder about the FTC’s continued focus on weight loss claims.

Kinesio Tape Maker Seals $1.7M False Ad Suit

By Jesse M. Brody, Partner, Advertising, Marketing and Media

Wrapping up a false advertising suit brought against the makers of “kinesio tape,” KT Health Holdings LLC and KT Health LLC agreed to pay $1.7 million to settle a challenge to claims that the athletic tape would relieve sports injuries.

Alexander Vuckovic filed suit in Massachusetts federal court in 2015, alleging that the defendants deceived consumers by promoting their KT Tape Original, KT Tape Pro and KT Tape Pro X as having unique pain-relieving effects that could help prevent injury when applied to the skin. The plaintiff pointed to several studies that showed a lack of evidence for claims that “kinesio taping” alleviated pain and facilitated lymphatic drainage by microscopically lifting the skin.

Following discovery, the parties began settlement discussions that resulted in a joint motion in support of preliminary approval of their agreement. The $1.75 million settlement fund will cover payments to class members (those who made purchases dating back to October 2011 are entitled to cash refunds of up to 50 percent of the full retail price they paid for the tape), attorneys’ fees and expenses of roughly $583,000, a $5,000 incentive award for Vuckovic, and the costs of notice and settlement administration.

Class members can submit a claim for one package of KT Tape without providing proof of purchase and can submit claims for up to five packages with purchase receipts or other proof of purchase. In no event will the amount distributed to the class members be less than the attorneys’ fees and expenses.

Injunctive relief was also included that requires the defendants to make labeling and advertising changes for all of the packaging and advertising for KT Tape. The defendants agreed to stop making claims such as “it will keep you pain free,” “prevents injury,” “for injury prevention” and “provides 24-hour pain relief per application.”

The phrase “can be used for hundreds of common injuries” will be modified to state “can be used for many common injuries,” while the disclaimer language on the back of KT Tape packages, in-store displays and elsewhere saying “not clinically proven for all applications” will be tweaked to read “not clinically proven for all injuries.” The revised disclaimer will be in bold print and with increased type size, and will be added wherever the words “for fast, easy pain relief,” “for common injuries” or “common injuries” are used.

To read the memorandum in support of preliminary approval of the proposed settlement in Vuckovic v. KT Health Holdings, LLC, click here.

Why it matters: The settlement agreement reflects the defendants’ “somewhat limited financial resources,” particularly in light of a successful declaratory judgment action filed by one of their insurers denying coverage, while also providing “significant injunctive relief,” the parties told the court in their motion in support of the deal.

Weight Loss Drug Gains FDA Warning About False Advertising

By Jeffrey S. Edelstein, Partner, Advertising, Marketing and Media

In the first warning letter sent since President Donald J. Trump took office, the Food and Drug Administration (FDA) cautioned the maker of a weight loss drug about false advertising.

A 60-second television ad for Orexigen Therapeutics Inc.’s Contrave failed to mention several key risks of the drug, the agency said, including the failure to inform viewers that the drug is not appropriate for those with uncontrolled hypertension, seizure disorder, bulimia or anorexia, those who are pregnant, and individuals who recently stopped drinking abruptly.

The ad “creates a misleading impression about the safety of Contrave,” the FDA wrote, despite statements such as “Contrave is not for everyone” and “Other side effects may occur.” These statements were insufficient to convey the specific risk information associated with the drug and “did not mitigate the omission of these important risks from the TV ad,” the agency explained. “By omitting serious risks associated with Contrave, the TV ad misleadingly suggests that Contrave is safer than has been demonstrated.”

Making the ad even more misleading, important risk information was communicated in the visual portion of the TV ad with unrelated risk information in competing audio messages, the FDA said.

“For example, the TV ad discloses important risk information regarding the warning and precaution for the potential risk of hypoglycemia in patients with type 2 diabetes only as a SUPER, although, television advertisements shall include information relating to the major side effects and contraindications of the advertised drugs in the audio or audio and visual parts of the presentation,” according to the letter.

In addition, the TV ad disclosed important risk information about the contraindication for concomitant opioid use in the audio portion of the proposed TV ad simultaneously with a SUPER containing unrelated risk information about the most common adverse reactions.

“The overall effect of disclosing important risk information in SUPERs only, along with the simultaneous presentation of SUPERs and competing audio messages, undermines the communication of important risk information and thereby misleadingly minimizes the risks associated with the use of Contrave,” the FDA wrote. “The presentation in the video is especially problematic from a public health perspective given the serious and potentially life-threatening risks associated with the drug.”

Ordering Orexigen to immediately cease its violations of the Food, Drug & Cosmetic Act (FDCA), the letter requested that the drugmaker explain how it plans to discontinue using the violative materials.

To read the FDA’s letter, click here.

Why it matters: The FDA took issue not only with the advertiser’s failure to disclose a number of serious risks but also with the way it presented some of the drug’s risks by simultaneously presenting a visual message about the most common adverse reactions to the drug while playing an audio message about not using it with opioids. The result, according to the FDA: multiple violations of the FDCA.